This investment vehicle can help farmers build wealth. The section 1031 exchange law, enacted in 1921, has been helping farmers and landowners build wealth and keep cash flow in their operation for decades.
The pace at which global corporations are expanding in the Sun Belt is extraordinary. To name just a few companies generating headlines, Amazon is making a sizable investment at its HQ2 in Northern Virginia and new office tower at Nashville.
In the farming industry, a 1031 real estate exchange is a common strategy to allow a farmer “defer” paying the capital gains and/or ordinary income taxes on an investment property when it is sold, as long as the “like-kind property” is purchased with the profit gained by the sale of the first property.
Triple Net Property leases, commonly known as NNN leases or net-net-net investments, are a well-known favorite amongst experienced investors. However, many of the significant benefits that make NNN leases so favorable also have the potential to be a downside.
Many investors encounter a wide variety of recommendations regarding what they should and shouldn’t do with their portfolios. Everyone has heard the expression “Don’t put all your eggs in one basket,” and for property investors in particular, this phrase should be near and dear. In less metaphorical terms, diversify your real estate investment portfolios.
Finding the right DST Advisor for your 1031 Exchange can make or break your investments. When it comes to finding the right investments and meeting deadlines to maintain the eligibility of your exchange, it is absolutely crucial to find an advisor that has the drive to get to know you, and provide suitable investment opportunities.
In short, Section 1031 of the Internal Revenue Code allows property owners to defer their capital gains tax by exchanging their property for “like-kind real estate” (also known as replacement property) with the proceeds from their sale. This strategy is a powerful tax deferment method that many successful investors in the United States utilize – but it is still quite tricky to navigate due to the many rules that must be followed.